We all must suffer one of two things: the pain of discipline or the pain of regret and disappointment. What we must understand however is that regret and disappointment hurt far worse than discipline.
~ Jim Rohn
This is a tale of two barbers, one on our corner and one across the street. Both know their craft and do a magnificent job in cutting hair. One has been in business for many years, and the other opened shop more recently, but has also been in business for quite some time.
Since we are closer to the barber on our corner, and we have the same landlord, naturally, I started going to the barber closer to us.
Being a small business owner myself, and a CPA, my conversation mostly turns to running business efficiently and to saving money. This topic is simply my passion, and that is what I know how to do best.
Since we frequently get asked about which payment processors’ fees cost less, and still offer quality, when it comes time to paying a fellow small business owner, my eyes immediately focus on the method of payment and I often ask what it is that they use for processing. I do this mostly out of curiosity, to see what this person’s experience is with the services; and perhaps, so I can learn something new, and help share that information with others. I also find this to be a good conversation starter, or ice breaker.
Turns out the barber next to us offers Square to his customers – a great way to quickly swipe and pay for the services rendered, the tip feature is built in, you simply press a few buttons, say thank you, and viola, paid.
This is great and obviously crafty, but this is not an ideal way to have people pay at a barber shop, don’t you think? Square charges more than most processors, as it is all about convenience; you’re paying extra for the effortless swipe, and a fancy read out. Why would you need to have your customers and/or yourself pay more in processing fees than is needed for features not likely to be used? basically putting money into Square’s (a large company) pockets?
Square is a wonderful solution for someone on the go, picture a yoga instructor, or a personal trainer taking payments in a park, where there is no computer station, that is what I mean when I say, “for convenience sake” – in my humble opinion, this is not an ideal processing solution for a barber shop.
Being the way that I am, I did manage to ask my former barber if he is happy with Square, and if he feels that the fees are adequate? Would you believe me if I told you, that he has never considered that? He simply said he is fine with the fees, and was not really interested in doing it any other way. I was a bit shocked that someone running a business, using very modern tools, would not seek alternatives. Obviously, this is not my place, business, nor a client, so, I kept that to myself, and moved on with my hair cutting as usual.
Most times I was due for a trim, as I showed up for a cut at 9 a.m. sharp (opening hours), the barber next door was sometimes there, and sometimes not, quite unreliable. Unfortunately, I knew I would need a new barber, as I really needed to be in and out of the barber chair, to attend to business – time is of the essence for me.
I asked Angie if she knew of another barber close by? and she mentioned to me that there is a barber across the center of our town. Angie always knows what is around, and what is best, I am always a bit clueless, typical male; how do women know all this stuff? my hat goes off to you ladies!
Anyway, I started going to the barber recommended by Angie, even though I had to cross the street, or at times, find a parking spot. I found out that the owner is a very pleasant older gentleman, who is always working, and always on time, nice and early; a huge plus for someone like me, who wants to be the first one in, and first one out. I never had to wait, not once, even though he has plenty of business, and customers come and go all the time.
As you guessed it, soon, where do you think did my gaze turn? yup, you guessed right, you know I looked directly to the payment method, and I found that the barber across the street used an older fashioned swiping machine, most probably using a more moderately priced merchant processor; which costs everyone involved less money, and hence, he found himself a way to make more money, by simply saving money in processing. A penny saved is a penny earned, or, many pennies saved = a nice profit margin, ehh?
The guy across the street, still had as much business as the next guy, no less. No one said, well, the barber across the street offers easier swiping with Square, so, let me go to the other place of business instead, no way, in fact, I left the guy on the corner simply because of punctuality, not for the fact that processing would cost less, the price for the cut was the same, and in addition, there is a third hairstylist next to the older barber (don’t know why a small town needs so many people cutting hair, but whatever), offering a cut for men, for only $10, so, it is clearly not about the price for me, or for most, I am sure.
After switching barbers (no easy task for a guy – girls, you’re not the only ones attached to your hair person, trust me), and soon after a little bit of small talk, I realized that the older barber had a similar problem to the other one. Stuck in his ways, he was, and blindsided by convenience, in the end, costing himself his own hard-earned money.
The only difference is that the older barber, was all about saving money, but he feared change. Here is how it went down. After the tax season, and after slowly bringing in the conversation of taxes and the like, I struck up a conversation about payroll processing with the older barber, and sure enough, his accountant was having him use ADP for processing. I explained to him that ADP is best suited for larger companies, and that his accountant is simply not doing him any service by having him run payroll using ADP. This poor fellow, who is watching every single dime like a hawk, is paying a big company like ADP, surely, anywhere from $2,500 – $3,500 in payroll processing costs each year – with check delivery, no less. This is crazy, I told him.
This was now an official social experiment for me, as I had to know……will this guy take this challenge I will propose to him? after all, barber or not, he is a business man first, and I am sure he wants to retire at some point.
I said to him, I can easily save you $2,000 right now by switching payroll modules. I did not say to him, do it with us, even though we offer payroll processing at our wholesale cost, I simply said, let me show you how you can save thousands of dollars each year, simply by switching payroll modules. You will add more features, have less hassle, and still save thousands of dollars each year.
Today, there are so many payroll processing options, companies like Gusto, Intuit Online Payroll, and many others, will gladly process your payroll for much less than a giant like ADP, or even Paychex, besides, processing is getting to be easier and cheaper each day. This is not to say that payroll problems are easy to fix, not at all, simply ongoing processing.
“Your accountant should help you by having payroll processed elsewhere”, I politely mentioned, and explained to him exactly why, and how it will save him money. So, I proposed; would you like for me to help you save money in payroll processing? After all, “that is what we do”, I said, and he knew this.
I was floored by what I heard next, do you know what he said to me? he turned my offer down, with a long naaa, and a wave of the hand, and continued to say, in a shaken, almost frightened voice, “it is all set up already, I do not think you can touch it once it is set up!”……ok….here is a CPA sitting in your chair, saying he will help you set up a better, faster, and much cheaper way of doing payroll, at no cost to you, saving you well over $2,000 a year in processing and hassle (remember, your time is money), and you are turning it down, simply because you are afraid of anything new and a bit of work to learn a new system, wow, I did not know that payroll processing is this big abyss of some sort.
Lesson to be learned here folks, look for ways to save yourself money, don’t be afraid of trying something new, what is the old financial formula? Ahh yes, with no risk comes no reward, that is correct.
To succeed in any business, monitoring costs is an integral part of the recipe to long-term growth, and ultimate profits. A business must learn how to control costs, adapt to changing times, budget, and to always choose the best price available to their organization. Not doing so, and “winging it” is one sure fire way to going out of business, and fast!
This next month, I will be discussing with you, specific tactics on how you can best help yourself succeed in any industry, in any business setting, simply by cutting costs in places you did not think or know you could save.
I will not attempt to show you how to manage your business, or how to handle your client base, that, you are already an expert in. I will simply suggest a few ways you can save and grow by doing so, you will see that by saving small amounts where you can, will over time, make a big difference in the aggregate.
If you have a topic of interest you would like to see us cover, feel free to reach out and let us know; we are always happy to hear your thoughts, ideas, and feedback.